State Dept. rejects Keystone XL pipeline

Protesters against the construction of the Keystone XL oil pipeline hold signs as they demonstrate outside of the W Hotel before the arrival of U.S. President Barack Obama on October 25, 2011 in San Francisco, Calif. - Justin Sullivan/Getty Images

Kai Ryssdal: If you wanted one issue, a single element, that you could use to crystallize the economic debate this election year, I think we've got it for you today.

This afternoon, the White House rejected what's called the Keystone XL pipeline. It would have run from the Canadian oil sands down to the Gulf of Mexico. Still might, in the long run. But in the meantime, it's become a big tangle of jobs creation, American competitiveness, government regulation.

And that's before you even get to the bit about what it means for energy policy. From the Marketplace Sustainability Desk, Scott Tong reports.

In December, congressional Republicans gave the president a two-month deadline to decide yay or nay on the pipeline. Energy consultant David Goldwyn says everyone knew that was unrealistic.

David Goldwyn: It was clearly a very cynical ploy to force the administration to reject the pipeline so they could use it as an electoral tool.

So now, the right has two issues for the campaign –- the energy issue and the jobs issue –- turning down a shovel-ready project. The left has an environment issue. And consumers have an energy bottleneck.

Goldwyn: Only in America could conservative Republicans combine with environmental activists to increase global dependence on Middle East oil.

That’s for now. Down the road, even environmental activist Bill McKibbon figures more Canadian oil sands will find its way to market.

Bill McKibbon: Environmetnalists never win permanent huge victories.

As he sees it, his side basically bought some time –- for the world to wake up to global warming.

McKibbon: For the moment we can slow down some of that mining of the dirtiest energy on earth.

In fact, the industry is already finding workarounds, since we the global consumers are willing to pay for it. Trains and trucks are moving oil sands to refineries, even though it’s pricier and less efficient than a pipeline, says analyst Mark Routt at KBC Advanced Technologies.

Mark Routt: This crude is literally moving anywhere, anywhere, by any means possible.

By the way, the Keystone pipeline extension is not dead –- the company can re-apply, if it wants to fight it out again, after the election.